Despite bitcoin getting plenty of mainstream attention from the media and Wall Street, two U.S. companies looking to launch bitcoin-based ETFs have decided to drop their attempts. Their decision came after SEC staff expressed concern regarding the liquidity and valuation of digital assets, including bitcoin.
Following Consumer Demand
With the launch of Bitcoin Futures markets on the CME, Cboe and TD Ameritrade, many thought it was only a matter of time before bitcoin exchange-traded funds (ETFs) were approved for retail trading.
That’s despite previous efforts stumbling, such as the Winklevoss twins’ proposal to list on the BATS exchange which was nixed in April last year.
However, it now looks like those believers will have to wait a little longer to get their hands on a real bitcoin ETF, as Rafferty Asset Management and Exchange Traded Concepts LLC announced its decision to cancel plans to launch three bitcoin-based ETF funds.
Although neither firm commented on why they decided to drop their bids, filings showed ongoing concerns by the Securities and Exchange Commission (SEC) as the leading reason behind the change of heart.
Recently the SEC has expressed concerns “regarding the liquidity and valuation of futures contracts” which has potentially spooked fund managers looking to cater to retail investors.
A Fork in the Road
The popularity of bitcoin, the leading digital asset that no single country or firm controls, has caught many in the media and financial industry by surprise. Many did not consider blockchain based currencies a threat — at first. With the rapid increase in attention and values, regulators and fund managers are starting to take extra notice.
It is a pivotal moment for the SEC. While many retail investors are clamoring to get exposure to the extremely volatile digital asset, others are looking to the SEC in 2018 to issue formal guidance on where it stands on crypto-based investment products.
Until that occurs, many passionate early adopters are left trusting overwhelmed third-party exchanges with questionable audit records that leave asset custody up to the purchaser. Although we expect some of these issues to be solved in 2018, more funds are beginning to weigh the risk of launching bitcoin-based ETFs against extreme retail demand.
Do you think 2018 is the year that bitcoin ETFs finally appear on global markets such as the Nasdaq or NYSE? Let us know what you think.
Images via SEC.gov